Discussing how much personal property coverage you need can be, well, personal. It's important to take an honest inventory of the items you own and how much it would cost to replace them. It also helps to know how this inventory impacts your premium.
How much personal property insurance do I need?
Some homeowners opt to only account for their "high impact" items: think TVs, furniture, computers, and so on. Others want to account for clothes, decorations, and the other things that would be lost in a total disaster. Often, the premium increase is negligible, so it's worth the peace of mind to cover all of your belongings.
Personal property coverage is often calculated as a percentage of your home's replacement cost, which is defined by your dwelling coverage.
The minimum coverage allowed by most companies is 10% of your home's replacement value. If your home would cost $200,000 to rebuild, this gives you a minimum of $20,000 in personal property coverage.
Replacement cost or actual cash value?
Most homeowners policy cover your personal property for its actual cash value (ACV) rather than its replacement cost. You can change that by adding a special personal property coverage endorsement to your policy.
Can I opt out of personal property coverage?
With an exclusion form, most homeowners insurance companies will allow you to opt out. This protects the carrier from homeowners that might take legal action if, in the event of a total loss, they find that their personal property is not covered. If you want to lower your home insurance premium, there are certainly more advisable ways to do it.
